South Africa is one of the most unequal societies in the world
This is despite the fact that the achievement of equality is one of the core founding values of our Constitution. Our failure to achieve greater income equality is reflected in the fact that our Gini index has deteriorated from 66 in 1996, to 70 in 2008. Inequality has also increased within all our population groups – from 54 to 62 among black South Africans, and from 43 to 50 among whites.
The most equal countries in the world – Japan, Sweden and Denmark – have Gini indexes of 25. In these countries the top 10 % earn only six times as much as the bottom 10%. By contrast, the top 10% in South Africa earn 110 times more than the bottom 10%.
What then are the roots of the persistent poverty and increasing inequality in our society?
A recent study by the World Bank provides some answers. According to the study inequality of opportunity among children is affected by personal and family-related factors such as:
- The gender and ethnicity of the child;
- Household composition – whether both parents live in the household and the number of children up to the age of 16;
- The education level, gender and age of the household head; and
- Whether the household is located in urban townships, informal settlements, other urban areas, or rural areas.
Other factors that can impact on poverty and equality include access to quality basic services such as education, health care, essential infrastructure including water, sanitation, and electricity, and early childhood development. In terms of these criteria, white children have enormous advantages: 83% come from two-parent households with relatively small families. They live overwhelmingly in urban areas and have access to good education and health services.
By contrast, only 30% of black children come from double-parent families. In poorer communities and in rural areas most have several siblings. 859 000 are double orphans and 98,000 live in child-headed households. The great majority of black children live in rural areas, informal settlements or townships. Very few have access to decent schools and health care.
Apart from such social factors, one of the principal causes of inequality is the catastrophic failure of our education system. Our children fare very badly in Grade 3 and Grade 6 numeracy and literacy tests. 60% leave school without a proper school-leaving qualification and those who pass the final school exam do so with an average mark of less than 40%. Only the 13% who obtain university entrance have reasonable qualifications.
Unemployment – exacerbated by poor education – is the other principal reason for persistent poverty and for our failure to promote equality. Unemployment levels are far more serious than official statistics indicate. The official unemployment rate at the end of the second quarter of 2012 was 24.9%. However, if the two million workers who have given up their search for jobs are included, the expanded unemployment rate climbs to 36.2%.
The real problem is the very low labour absorption rate particularly among black South Africans. Only 36.8% of black South Africans between the ages of 15 and 64 are in employment – compared with 63.2% among whites.
At the same time, important progress is being made in improving the conditions in which the poorest segments of our population live. A recent study by the South African Institute of Race Relations shows that state programs are already having a marked effect on improving the basic living conditions of the poorest segments of the population. The study is based on an analysis of recent Living Standards Measures (LSMs). LSMs categorize people – not according to income – but according to objective criteria such as whether they are urbanized, own motor vehicles or major appliances, or have running water or a flush toilet. LSM 1 is the lowest or poorest category and LSM 10 the highest.
The study revealed that between 2001 and 2011 the percentage of people living in the lowest four LSMs diminished from 52.6% to just 24.4%. This improvement is ascribed almost entirely to the enormous increase in social transfers in the past 10 years. This includes the provision of children’s allowances, disability payments and pensions to 15.6 million people – more than 30% of the population. State transfers now comprise the largest income component for the bottom 30% of the population.
The improvement in living standards also reflects the provision of more than three million state houses and greatly enhanced access to mobile phones, electricity, water and sanitation services. Between 2001 and 2011 per capita social spending increased from R4 993 to R10 207 in constant 2008 rands. Increased social expenditure has undoubtedly had a significant impact on living standards – but not on income levels. The problem is that such transfers are unsustainable and hold the danger of creating a permanent dependency culture.
The long-term solution to the problems of poverty and inequality lies in vastly improving our education and training system, in creating jobs and in ensuring rapid and sustainable economic growth. It will also be essential to address the underlying social problems identified by the World Bank. These are precisely the factors that have been diagnosed and addressed by the South Africa’s National Planning Commission in its National Development Plan. The challenge will be to ensure that we successfully implement the National Development Plan. If we can do so, I am confident that we will be able to make continuing progress in reducing poverty and inequality – and thus, in achieving the vision in our Constitution.
Frederik Willem de Klerk
Nobel Peace Prize 1993